Interactive Investor

Best and worst shares: Trainline, Micro Focus, Pets at Home, Ibstock

3rd November 2021 15:56

Graeme Evans from interactive investor

Our shares expert runs through the day’s top-performing stocks and the ones that must try harder.

A year after being one of the “go-to” stocks in the Pfizer (NYSE:PFE) vaccine trade, shares in the ticketing firm Trainline (LSE:TRN) are back where they started after losing 10% of their value today.

The company's half-year results highlighted the long road back for Trainline, despite August's recovery to pre-Covid levels of consumer demand as train travellers increasingly opt to use digital tickets for their journeys. Across the six months to 31 August, net ticket sales were 71% of their pre-pandemic levels and this led to an operating loss of £9 million.

Sentiment has been shaken by government plans for a rival Great British Railways ticketing app, which sent shares sharply lower in the summer and continues to cloud the investment case.

Trainline provides white label platform and tech services to several train operators, a business that it admits would face a significant impact if the GBR app replaces existing services.

But should government ministers decide to use a tech partner to host their online retailing platform, Trainline believes it is well placed to meet their requirements.

Trainline shares opened at 308.6p on so-called Pfizer Monday (9 November 2020) and rocketed to 408.2p that day as part of a wave of reopening bets on consumer-facing stocks.

They peaked at 536.5p in early March but the performance has been downhill since then, including the 20% fall on the day the Williams-Shapps plan for UK rail pledged to simplify the system of ticket sales through a new state-run body.

Trainline was today's biggest faller in the FTSE 250 index after the publication of interim results, which included a narrowing of the loss per share to 1.8p from 8.1p the year before.

Shares reversed 33.6p to 288.8p, leaving the stock well below the 350p price of the June 2019 IPO when Trainline was valued at £1.7 billion in one of the UK's biggest listings of that year.

Micro Focus International (LSE:MCRO), which is no stranger to stock market turbulence, was the biggest riser in the FTSE 250 after unveiling the $375 million (£275 million) sale of the archiving arm it inherited from Hewlett-Packard Enterprise in 2017.

Shares jumped 8% or 29.3p to 392.7p, returning the former blue-chip stock to where it was at the start of October. They had been at 587p in March.

Bricks and concrete products firm Ibstock (LSE:IBST) was another FTSE 250 riser after it reported a strong third-quarter performance, underpinned by robust demand from housebuilders and customers in the repair, maintenance and improvement sector.

Its expectations for the full year are unchanged after chief executive Joe Hudson said the company had been successful in managing supply chain challenges.   

Hudson also announced the creation of a new division called "Ibstock Futures", which will focus on new product categories he hopes will grow more rapidly than the wider market. Shares rose 2% or 4.6p to 207.4p after recent weakness, with analysts at UBS holding a 260p target price.

Pets at Home (LSE:PETS) shares came under pressure today, despite forecasting that results for the year to March will be ahead of previous guidance and at the top end of City expectations.

The share price fall of 2% or 10.2p to 489.2p reflected investor disappointment at the announcement that chief executive Peter Pritchard intends to step down next year.

Liberum analysts said Pritchard leaves the group well positioned and able to attract a new high-quality CEO. They added: “We see further upside risk to forecasts as self-help levers look set to drive ongoing outperformance versus the UK pet care market’s accelerating growth.”

The broker upped its price target by 25p to 575p after today's update triggered another 3% lift to profit forecasts on top of the 30% increase to Liberum's 2022 estimates over the past year.

Construction firm Morgan Sindall (LSE:MGNS) also produced a positive update on trading today, leading to guidance for a full-year performance slightly ahead of its previous expectations. This included a record period of order wins for the Fit Out division and a strong showing for the construction and infrastructure arm, where a full-year operating margin of 3% is expected.

Shares hit 2,685p in early September but have been under pressure since then, with Morgan Sindall down another 10p to 2,220p despite today's encouraging update.

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